Myntra says private label business has turned profitable

Myntra CEO Ananth Narayanan. Over the past year or so, the online fashion retail firm has emerged as the third largest e-commerce firm in India, after parent Flipkart and Amazon and at the expense of Snapdeal. Photo: Hemant Mishra/Mint

Bengaluru: Flipkart-owned fashion retailer Myntra said on Thursday that its private labels and brands business has turned profitable, even as it remains on track to grow revenue by at least 50% this financial year to about Rs8,500 crore, hit an annual revenue run rate of $2 billion and touch overall profitability by the end of 2017-18.

Myntra said the online retailer’s private brands business posted a 5% profit at the Ebitda level in June and remained profitable in July. Myntra expects its portfolio of 13 fashion brands to double growth and generate revenues of around $300 million this financial year.

Since 2015, Myntra has built out a formidable private label business, which currently accounts for nearly a fourth of its total revenues. Myntra’s roster of private brands includes Roadster, Dressberry, Anouk and actor Hrithik Roshan’s HRX brand.

Myntra’s overall year-end sales target also includes revenues from Jabong, which it acquired last year at a cut-price deal of $70 million. Myntra expects Jabong to grow at least 40% this financial year. A $2 billion annual revenue run rate implies monthly revenues of roughly $165 million.

Myntra and Jabong chief executive Ananth Narayanan said the fashion retailer was working to ensure it continues to grab market share, even as it looks to keep burn rates under control. “It’s easy to get to profitability without growth. We’re trying to get to profitability and are continuing to grow and that’s important,” said Narayanan.

Over the past year, Myntra has tried to curb costs and reduce discounting. “We’ve been very rational about controlling costs. The biggest (area of cost optimization) has been supply chain and predicting where inventory needs to be placed, so that the actual package travels less,” said Narayanan.

“We’ve also been optimizing overall product selection, so figuring out what the right products are, so that we can get the sell-through rates optimized,” he added.

Myntra had launched a new sale event in April based on high fashion and minimal discounts as it sought to shift towards selling full-price products. Over the coming months, Myntra is expected to host at least another one or two of these full-price sale events.

“We’ve also been working with sellers to reduce discounts -- the overall ecosystem’s discounting has gone up by 10-15%, so in that context we’re still down 3% from last year. But beyond a point, you can’t have so much dissonance,” said Narayanan.

Narayanan said would look to reserve big discounts only for marque sale events like its flagship end of reason sale (EORS) in the near future.

“Every year, we’re trying to move more towards full price,” said Narayanan.

Over the past year or so, Myntra has emerged as the third largest online retailer in the country, at the expense of Snapdeal, which has lost market share dramatically during the year on the back of falling sales and was forced to put itself up for sale earlier this year.

In June, Mint reported that Myntra is aiming to grow sales by at least 45% from last year during its upcoming season-end sale, driven mainly by exclusive tie-ups with brands such as Mango, Esprit and Forever 21, even as it looks to touch annual revenue of about Rs8,500 crore for the 2017-18 fiscal year.

Earlier this year, Myntra forged brand partnerships with two women’s apparel brands—western wear brand Chemistry and ethnic wear brand AKS. As part of its brand accelerator programme, Myntra is aiming at roughly $500 million in gross sales from up to 15 such brands over the next three years.